Origin Of The Stasi's "Off The Books" Op, Art To Finance Espionage

Berlin, April 22, 1956 in a previously unknown tunnel a few feet under Checkpoint Charlie, machine gun fire erupted as Soviet and East German soldiers ambushed Americans in a secret passageway built by the CIA. The border between the hostile powers at the height of Cold War would never be a nice place, but the engineer who built this escape route west was put in danger by a British leak to the Reds.

SOVIET STAMP HONORING CAMBRIDGE FIVE MEMBER, KIM PHILBY

This was the denouement of the infamous Cambridge Five, a group of treasonous British homosexuals educated at Cambridge; they were Guy Burgess, Anthony Blunt[1], Donald Maclean[2], Kim Philby, and John Cairncross. Burgess, Maclean and Cairncross were detected by 1951, but Kim Philby stayed in the game long enough to expose the tunnel under Checkpoint Charlie, according to a former CIA employee interviewed for this story.

The embarrassing exposure of CIA tunnels under the Iron Curtain went far beyond the border of Germany, besides the obvious casualties underground, renewed exposure by the Cambridge Five was devastating to British Intelligence services, Mi5 and Mi6. Not only had the British intelligence services been totally compromised by Russian spies, it was an embarrassment to Queen and Country (Anthony Blunt was cousin to Queen Elizabeth, and he never faced prosecution), worse, it torched the relationship with the American CIA, whose operation got burned. No longer would Britain occupy such a lofty slot in the intelligence world, that remained only in the movies or simply fiction by Ian Fleming. Like a distrustful lone wolf, CIA now operated alone without the British, the risk was too great that another aristocratic homosexual canary would sing to his communist boyfriends.

Indeed, much supposition remained for decades over the Fifth Member of the Cambridge Five. Eastward too there were ramifications as the Soviet spy rings in the West were almost all removed, so the now familiar KGB "Judo Strategy" was to use the West's peculiar tastes against them. The West wanted Jews freed? To comply with the trade terms of the Jackson-Vanick Amendment eliminating tariffs on export goods, the Russians allowed a certain number of Jewish emigrants to leave each year, but these weren't the nuclear physicists such as Andrei Sakharov, instead, they emptied their prisons.

Thus the Russian Mafia got its birth in the West. Brighton Beach Brooklyn, here they come. Cuba copied that move when Castro opened up his prisons for the Mariel boatlift of 1980. In retrospect the Communist playbook got predictable, central planning did not allow for creativity even for mischief.

THE BODY OF PETER FECHTER LYING NEXT TO THE BERLIN WALL AFTER BEING SHOT IN 1962 WHILE TRYING TO ESCAPE TO THE WEST

By its very location, East Germany was forced to become a lead player in this Cold War intrigue. The people of the Deutsch Democratic Republic (DDR) chaffed under the Russian boot, which remained an odious presence for decades after the end of the Second World War. Even with barbed wire and a newly constructed Berlin Wall, dozens, if not hundreds of East Germans died each year in the no-mans land between East and West. As such, East German refugees achieved a sainted halo to the west; not only inspiring yet another way for the communists to send in infiltrators to the West, but as a perverse cash source to the hard working but chronically poor East Germany.

Hobbled in its economic efforts by its' thralldom to Moscow, the East Germans did peculiar things to generate extra money. This task fell to their state police, the Ministerium für Staatssicherheit, or just simply “the Stasi,” who often ransomed refugees to their western counterpart, the Federal Republic of Germany, and on the QT the East Germans sold the possessions of formerly wealthy individuals by simply walking in, demanding receipts, and taking what they wanted. Ownership prior to the war was not acceptable, one must show receipts of taxes paid, and if not provided then 90% was carted away.

There may be many who question this perspective or take on Cold War history, regarding this writer's seeming bias against the effectiveness of Mi6 and the very presence of homosexuals in espionage. First of all the story of the Americans getting shot at in the tunnels far beneath Checkpoint Charlie is a confirmed fact. After that happened and especially when Kim Philby left for parts east, the CIA never looked at Mi6 the same after the Cambridge Five was revealed. As a matter of fact, the tunnel used in Operation Gold in Berlin (known as Operation Stopwatch to the British) was constructed under no less the authority of Allen Dulles and Reinhard Gehlen, two of the most formidable names in Cold War espionage. So when a disciple of theirs points the finger at the Cambridge Five, that should be regarded as if those words came from Gehlen and Dulles themselves.

PRESIDENT JOHN F. KENNEDY ARRIVES AT CENTRAL INTELLIGENCE AGENCY HQ TO PRESENT NATIONAL SECURITY MEDAL TO ALLEN DULLES, NOV. 1961 DULLES WAS FORCED INTO RETIREMENT THE VERY NEXT DAY PHOTOGRAPHER: ROBERT LEROY KNUDSEN (1929-1989)

Where did that leave Red Espionage after 1963 when Philbys flight became public? In the long term, the true depth of Soviet infiltration was supplied by the Venona Project, a precursor as it were of the NSA signals monitoring, that broke the Soviet codes. Those messages confirmed Russian spies were treasonous in the USA (David Greenglass, Julius Rosenberg, Ethel Rosenberg, Klaus Fuchs et Theodore Hall) while the decrypted messages also alluded to gay Soviet moles in Mi6. All fact. A legacy of that time period I saw first hand. The CIA applications asked applicants if they were homosexual or travelled to the East Block. I don't have those papers anymore, but I was offered a job with them in April 1985.

Pompous recruiter said, "What would you do for the CIA?"

Alex, "Go deep cover in the Soviet Union and kill communists"

Recruiter, "You are hired!"

I never filled out the application but strangely enough I saw that same CIA guy at a New York club in 1999. I still have his contact information, but he is one cold fish. That life takes its toll, the road not taken, at that very moment a close friend walked out on a grad degree at Yale while I elected not to be a company hit man. The art world's gain.

Back to the intro of why the Stasi came into being, and for all intents and purposes took over for the KGB in Western Europe. This is also confirmed by the now published stories of Soviet defector Anatoliy Golitsyn, as when he came west, he too exposed the hidden Soviet moles. Long and short of it was by the mid 1960’s the now totally exposed Soviets didn't decide to behave, they simply subcontracted to the Stasi, who were highly efficient unknowns. Nothing like a killer whose fingerprints are not in the system, the mob calls such foreigners zips because where these guys come from, there are no zip codes. Not only were the Stasi brutally efficient, this “Off the Books,” way of financing themselves through the art and antiques trade showed real elevation of their trade craft as the very best of the east, since their transactions were totally off the radar. No cancelled checks from Moscow! There would be no paper trail. It was the ultimate one off pad. A professional forensic accountant employed by CIA, Mi6 or FBI would have nothing to go on if the payment for treason was in art, say for example a "lost van Gogh" not seen since the waning days of World War Two. Government officials have been sold out for less, and in manners much more readily detectable. We have yet to find out the total extent of the Stasi’s activities under General Alexander Schalck-Golodkowski or his Kunst & Antiquitäten, they are documented as having confiscated some 220,000 objects from innocent East German collectors, and upwards of 10,000 paintings, and of the latter, so far evidence is pointing to them showing up at Christie's (not yet Sotheby's). That trend too, is a disturbing pattern we will delve into as more evidence awaits inspection, and comes to light.

FORMER DDR-STASI GENERAL ALEXANDER SCHALCK-GOLODKOWSKI FIRST MAJOR EAST GERMAN FIGURE TO GO WEST BEFORE THE FALL OF THE BERLIN WALL, SAFELY ENSCONCED IN THE FORMER AMERICAN OCCUPATION ZONE NEAR MUNICH, HE HAS ENJOYED VIRTUAL IMMUNITY FROM PROSECUTION SINCE 1989

Making news on the front page of the New York Times in late November 2014, is the case in a German court over the legality of ownership regarding the Adriaen Coorte sold at Christie's Amsterdam in 1988 that wound up as the property of the Weldon Family. The Weldon family holds that the works change of ownership was an act of a legal government, obviously Berlin lawyer Ulf Bischof for the Meissner family disagrees, but so too does a former assistant United States Attorney Mark Gaffney, an internationally recognized and respected legal scholar. In answer to our questions on this subject, Mark Gaffney wrote the following:

The USA and the Deutsch Democratic Republic (East Germany) set up a bilateral trade treaty in 1976, but for the entire existence of the DDR from 1949 to 1990, there was minimal trade between the USA and the DDR. It is not illegal under US law for US citizens and US companies to trade with an unrecognized foreign government (the DDR from 1949 to 1974), but they do so at their own risk that the unrecognized foreign government may try to screw them in violation of common commercial norms. The only exception is the Trading with the Enemy Act, making it unlawful for US citizens and US companies to trade with designated hostile nations (designated by the POTUS and the Treasury Department). The DDR was never designated a hostile nation; the Peoples Republic of China and North Korea were designated as hostile nations in 1950, and Cuba in 1962, and The Trading with the Enemy Act was never applied to the USSR or the DDR. Before the trade agreement in 1976, under the Export Control Act, US exports to the DDR (and the USSR) were forbidden without a license from the US Treasury Department, but not imports. Trade between the DDR and the FRG was relatively strong and increasingly so after 1973, because the two Germanies were always deemed one country under FRG law.

On the subject of the legal status under US law of seizures of private property by foreign governments within their sovereign territory, I enclose two articles I wrote for Bloomberg Law in 2008 on the “Act of State Doctrine” and “Foreign Sovereign Immunity”. They discuss cases applying these doctrines to seizures of private property in Russia, Nazi Germany, Cuba, Panama, Nicarauga, etc. - I’m not aware of a US court opinion on Stasi seizures of art objects in the DDR. Today these doctrines would not block recovery in US courts of property stolen by the Stasi, because the DDR no longer exists and the FRG would support such recovery if proof of ownership can be mustered.

Another exception to foreign sovereign immunity applies when a claim is asserted against a foreign sovereign involving taking of property in violation of international law, when that property is located in the U.S. or is exchanged for property located in the U.S.[i] This exception is consistent with the traditional scope of the act of state doctrine, which is a conclusive presumption of the legality of actions of a foreign sovereign, including actions alleged to violate international law, but only actions within its own territory. Thus, U.S. courts traditionally did not entertain claims against a foreign sovereign for compensation for taking of property within the territory of the foreign sovereign.[ii] Congress in 1964 reversed this aspect of the act of state doctrine, and made it inapplicable to foreign governmental seizures of assets of U.S. citizens in violation of principles of international law after January 1, 1959. Section 301 (d)(4) of Foreign Assistance Act of 1964, Pub.L. 88-633, 78 Stat. 1019, 1013, codified at 22 U.S.C. 2370(e)(2).[iii]

No Sovereign Immunity? This story gets more interesting by the day, forget the fact that seen below are three paintings that have sold at Christie's for upwards of eight million dollars, the more one probes, the numbers and the liability born by whatever auction house took consignments from presumably various Stasi fronts, make this an entirely explosive subject regarding clear title in art. More is surely to come.

Alexander Boyle

STASI SWAG #1: ADRIAEN COORTE, SOLD AT CHRISTIES AMSTERDAM

STASI SWAG #2: AMBROSIUS BOSCHAERT THE ELDER SOLD AT CHRISTIES LONDON ONE LIKE IT FETCHED $4 MILLION THIS PAST AUTUMN